CFPB  Enforcement

  • Payday lending: On July 10th, the CFPB ordered ACE Cash Express, one of the nation’s largest payday lenders, to pay $5 million in consumer refunds as well as a $5 million penalty for alleged unfair, deceptive, and abusive practices under the Consumer Financial Protection Act in connection with its collection of payday loans.  CFPB Director Richard Cordray stated on a press call that ACE, “used illegal debt collection tactics—including harassment and false threats of lawsuits, or criminal prosecution—to bully overdue borrowers with a demonstrated inability to repay their existing loans into taking out new payday loans with expensive fees.”  Cordray also prominently referenced ACE’s training manuals, which directed collectors to “create a sense of urgency” in contacting delinquent borrowers; the CFPB posted on its website a diagram from ACE’s training manual.  The consent order also requires ACE to submit within 60 days a debt collection operations compliance plan.

CFPB Operations

  • Credit scoring: On July 3rd, the CFPB published its “Report on the Use of Remittance Histories in Credit Scoring,” to provide further empirical analysis to its July 20, 2011, report under the Dodd-Frank Act regarding, “the feasibility of and impediments to using remittance information in credit scoring.”  The CFPB determined that, “remittance histories add very little to the predictiveness of a credit scoring model” for consumers with unscorable credit records.  The CFPB also determined that, after controlling for credit scores, “remittance histories are positively associated with delinquency.  This appears unrelated to the remittance transfers themselves and instead results from selection effects that cannot be adequately explained by the data.”  In its conclusion, the CFPB stated, “The limited value that remittance histories appear to provide for predicting credit performance stands in stark contrast to the potential offered by other forms of alternative data,” such as utility and rental payments.
  • Same-sex marriages: On July 8th, the CFPB published on its blog a June 25, 2014, letter from Director Cordray to CFPB staff on, “Ensuring Equal Treatment for Same-Sex Married Couples.” The letter states that the CFPB, to the extent permitted by law, recognizes, “all marriages valid at the time of the marriage in the jurisdiction where the marriage was celebrated. Accordingly, the [CFPB] will regard a person who is married under the laws of any jurisdiction to be married nationwide for purposes of the federal statutes and regulations under the [CFPB’s] jurisdiction, regardless of the person’s place of residency.” A footnote clarifies that, “internal policies pertaining to [CFPB] employees have been addressed separately and are outside the scope of this memorandum.”

CFPB & Congress

  • CFPB funding: On July 9th, House Financial Services Committee Ranking Member Maxine Waters (D-CA) wrote a letter to House Rules Committee Chairman Pete Sessions (R-TX) requesting that the Rules Committee “not protect” from points of order certain sections of H.R. 5016, the “Financial Services and General Government Appropriations Act of 2015,” because such sections, “place improper funding restrictions on our financial regulatory agencies and inappropriately authorize on an appropriations bill.” Among other restrictions, Waters cited section 501, which would affect the Federal Reserve’s funding of the CFPB. “It has been well established,” Waters wrote, “that Congress intended for the [CFPB’s] funding to be free of political influence, similar to other independent banking regulatory agencies. Sources of funding for the [CFPB] have been appropriately debated during the current Congress in the authorizing Committee of jurisdiction.”

CFPB  Rulemaking

  • Mortgage title heirs: On July 8th, the CFPB issued an interpretive rule to, “clarify that when a borrower dies, the name of the borrower’s heir generally may be added to the mortgage without triggering the [CFPB’s] Ability-to-Repay rule, and that the heir may be considered for a loan workout if necessary in order to maintain ownership.  CFPB Director Richard Cordray stated that the rule, “makes it clear that when family members inherit property, they can take over the mortgage without jumping through unnecessary hoops.”

CFPB Outreach

  • Financial literacy: On July 9th, Director Cordray delivered prepared remarks at the financial literacy data release of the U.S. Program for International Student Assessment. Cordray noted the data’s indication that youth in Shanghai, Australia, and New Zealand demonstrated stronger financial education skills than American youth, and reviewed several major recommendations from the CFPB’s 2013 report on promoting youth financial capability.  “To construct a more financially capable America,” he stated, “we must  develop a knowledge base that gets passed on to others in a more rigorous and systematic way.”
  • Consumer complaints: On July 10th, the CFPB announced that it will hold a field hearing in El Paso (TX) on July 17th, beginning at 10:30 AM MDT, on consumer complaints.  The CFPB did not provide any further information on the field hearing’s topic.  Director Cordray is scheduled to deliver prepared remarks at the public event, which will be broadcast on the CFPB’s website.